Why parents should talk to their kids about money: Kids hear about money in many different ways: TV, school, friends, parents and social media. Kids need to know how to deal with our changing economy, recession, job loss, and financial security. They also need to know how to budget and stretch a dollar to be able to function in, and survive adulthood.
Depending on your child’s age, here are a few guidelines about discussing the topic of finance and money:
For a very young child, introduce coins to your child. Give them a jar to see their coins accumulate. Play games with your child using their coins.
Kindergarten and early school age children could start to have a small allowance. You could stipulate that they should expect to do a few weekly chores in exchange for the allowance. Keep the amount the same each week. Use allowance as a tool for money management, not as punishment or reward.
Elementary school children can be told how you earn their own money and you could perhaps start to explain your monthly expenses such as food, transportation, and housing to them. You could start to talk about wants and needs.
Middle school age children are starting to be pressured by their friends to keep up with the newest and the best. Be a strong role model and demonstrate smart spending and financial decisions. You can share past spending mistakes and how you’ve learned from them. You can talk about a spending and saving plan as you increase your child’s allowance each week.
You can talk to your teenager about opening a savings account at your bank in their own name and you can even look at a pre-paid credit card to help your child establish a credit history and good credit practices while they still live at home. You can discuss with them the idea of getting a part-time job so they can manage and earn their own money and to start to save for further education or larger items such as a used car.
Before your adult children move out on their own, you can review living and education expenses, go over their financial responsibilities, go over budgeting, and help them with financial accounts if they move away to another city.
A few pointers: Don’t tell your kids that financially, things are ok if they aren’t. Take time to explain what they probably already know from the talk and atmosphere in the household. Don’t be dishonest. It goes against everything we say as parents and we need their trust in us. Don’t predict the future, but don’t be silent either. They know from actions what is going on and will attempt to figure it out themselves. Talk to them and set them straight. A good time to talk to your kids about money is over dinner. Explain money shortfalls in age-appropriate terms.
In short, if you don’t talk to your kids about money, somebody else will and it might not be the advice you would like them to have. Parents are not perfect. Be honest explaining your achievements and your own mistakes and try to guide them to the best of your knowledge.